Cryptocurrency is the talk of the finance world. By offering greater speed, reduced transaction fees, and decentralization, cryptocurrencies are changing the dynamics of the financial sector. The interest of consumers in cryptocurrency is growing, with 20% of the population from some countries holding cryptocurrencies. Credit card companies are expanding in the crypto domain to explore its possibilities. This includes Visa, and Mastercard, which has partnered with leading cryptocurrency platforms to issue secure, compliant crypto credit cards to customers. These days more and more customers are interested in using crypto assets for payments. Visa reported that customers spent $1 billion worth of cryptocurrency globally on goods and services in the first six months of 2021. These cards are accepted anywhere the Visa or Mastercard are accepted, and they can be used for purchases just like the traditional credit cards. Like traditional credit cards, crypto credit cards also come with rewards on purchase. Still, instead of cash back or airline miles, the customer will earn Bitcoin or other cryptocurrencies, and the customer can redeem these earnings for cryptocurrencies.
Besides the crypto credit cards, merchants also issue crypto debit cards, allowing consumers to spend their cryptocurrency from their accounts. They are just like traditional debit cards, but instead of being backed up by your bank account, they are backed up by your crypto wallet. So, in order to use a crypto debit card, you must have cryptocurrency in your account. Both crypto credit and debit cards allow customers to earn rewards based on their day-to-day spending. The rewards depend on the credit card merchant. For example, with crypto credit cards backed by Visa, you can earn up to 4% in cryptocurrency of your choice. These cryptocurrencies have the potential to appreciate as compared to the traditional fiat currencies like the US dollar. Visa estimates the crypto-backed credit and debit cards can disrupt the $18 trillion cash and checks industry. We will help you decide whether a crypto credit card is a good option for you through this article.
The Top Two Benefits of Owning a Crypto Credit Card
With the cryptocurrency boom on the horizon, it might be a great time to get a crypto credit card. Now traditionally, people could hold, trade, and sell their cryptocurrency on various crypto platforms. However, they would need to convert their cryptocurrencies into fiat to buy goods and services. So, they were not able to use their cryptocurrencies directly without this conversion. Additionally, this conversion came with an exorbitant fee.
Crypto credit cards don’t come with massive fees
Using a crypto-based credit card means you no longer have to pay this exorbitant conversion fee and can spend your crypto almost as freely as more standardized forms of currency. Besides that, banks usually charge fees for credit card services. But with crypto credit cards, this fee is eliminated if your spending limit is within the threshold amount of that particular year.
Further, there is also no foreign exchange fee associated with crypto credit cards, making them significantly advantageous for consumers who regularly purchase goods from different countries across the globe. Many crypto credit cards offer low or zero monthly transaction or activation fees. These crypto credit cards conveniently allow users to handle their crypto holdings by enabling fast, traceable, and efficient transactions, which have profoundly transformed the overall cryptocurrency ecosystem over the past several years. Gone are the days of massive, unnecessary fees and fiat conversions. Now, consumers worldwide can utilize cryptocurrency in their daily lives to purchase traditional goods and services quickly and easily.
Related: Could Cryptocurrency Ever Challenge the Gold Standard?
Crypto rewards are (arguably) superior to normal credit card rewards
The crypto credit rewards are pretty appealing to consumers too. Customers get rewards in cryptocurrencies on their purchases instead of cashback (which is the case for a traditional credit card). While the cashback remains constant, crypto rewards have the potential to significantly increase in value over time, especially if the rewards involve popular forms of crypto, like Bitcoin, Ethereum, XRP, and more. This is a significant change from the usual rewards people typically receive when using standard credit card services.
For example, if you get any product from the cashback rewards of your credit card company, the product will eventually decrease in value. Additionally, you can’t resell reward services like flights or hotel bookings, and they will typically expire if not utilized within a specific amount of time. Many credit card users complain that they cannot redeem their rewards in certain situations. For instance, during the pandemic, when flights were not working, people could not redeem their airline miles for the entire year, essentially making the rewards not only worthless but highly disappointing for dedicated users of specific credit card companies.
On the other hand, if consumers receive cryptocurrency rewards in return for their use of crypto credit cards, they may be able to resell it with the potential of earning some significant profits. Of course, this strongly depends on how well the particular crypto they receive is performing on the exchanges when they sell it off. This ability inherently makes crypto rewards a much better offer in the eyes of many crypto-savvy consumers who know how to operate effectively within the market.
With crypto rewards, people would also not have to worry about their rewards being unredeemable in dangerous or problematic situations, like those posed by the global COVID-19 pandemic. They can get cryptocurrencies which they can trade, sell and exchange at potentially significant profits. This characteristic of the crypto credit rewards reduces customers’ reliance on their credit card providers and their carious terms/conditions, as cryptocurrency gives them complete control over their rewards. The customers can decide how and when to redeem the rewards they receive without being pressured by expiration deadlines that threaten to nullify their rewards entirely.
However, people should remember that cryptocurrencies are volatile and might not be the best for some people looking for access to instant or short-term gains. That said, those who don’t mind playing the long game to help ensure they make the most out of their crypto on the exchanges may be able to turn a significant profit as a result of selling the crypto rewards they gain. Though it’s essential to keep in mind that these gains may impact the amount you pay when filing your income taxes for the year.
Do you want to take more control over your financial future and freedom but aren’t sure of the best ways to get started? Reach out to us at Unbanked today to learn about our wide range of top-quality services and everything we can do to help.
Other Key Benefits of Crypto Credit Cards
A lack of exorbitant fees and the presence of fantastic reward options for consumers are far from the only possible benefits when it comes to making the switch to a crypto credit card. From security, the absence of a credit check, and easy conversion methods, there are several other advantages that potential crypto card users should know about when they start to consider making the switch.
The security of crypto credit cards is just as good as regular credit cards
Because crypto credit cards are issued to consumers via partnerships with massive financial corporations and issuing banks, they’re typically connected to huge, well-established networks like Mastercard and Visa. Because of this, consumers can take comfort in the fact that their cryptocurrency purchases and transactions will be just as secure as when they use any other type of traditional credit card. And while crypto credit cards might not be as widely accepted as conventional credit cards, businesses worldwide are rapidly expanding to accommodate their usage. Meaning that, over the next several years, the overall acceptance of crypto credit cards is likely to grow massively on a global scale.
That said, while basic security for crypto credit cards is the same as traditional credit cards, it’s essential to note that users probably won’t receive all of the additional fraud and purchase protection options as credit cards when they make the switch. For example, if a consumer pays for a product with a regular credit card and it gets lost, stolen, or damaged, they’ll likely be able to get their money back. Additionally, traditional credit card users will typically have no liability for any fraudulent charges made with their cards. This likely isn’t the case for those utilizing crypto credit cards, however.
Crypto credit cards don’t require a credit check
When people apply for regular credit cards, they’re typically required to submit their personal information and allow the issuer of the card to run a credit check. If they pull your credit information and find you have a less than stellar credit score, they may not offer you the best credit card with the most valuable perks or rewards. There’s even a chance they may not approve you for a card at all! With crypto credit cards, however, that isn’t the case. Your credit score isn’t a factor when qualifying for a crypto card because it doesn’t actually involve accessing credit. You’ll just need to ensure you’re topping off your balance as needed.
However, it’s also important that this particular benefit is mirrored by a specific drawback as well. Just like how you’re not required to undergo a credit check to receive a crypto credit card, products and services purchased via a crypto credit card won’t impact your credit history or help you start to build up a better credit score.
Related: What is a Virtual Debit Card: Everything You Need to Know
It’s easy to convert your crypto into normal money
The final benefit on this list of switching to a crypto credit card is that cardholders can easily use their crypto assets on top of the balance of other accounts through a simple conversion of crypto to a more traditional currency. This benefit removes the hassle that comes from withdrawing money from crypto exchanges to add to other types of bank accounts, allowing crypto investors to spend their assets and crypto rewards more easily. That said, as mentioned in a previous section above, cardholders need to keep in mind that this will likely result in some tax implications when it finally comes time to file income taxes. Because of this, it’s always important to keep a detailed record of every instance where you exchange or use your crypto.
The Bottomline
Whether you get a crypto credit card or not, it’s completely up to you, depending on your financial goals. If cryptocurrency is a part of your investment portfolio, crypto credit cards are a good way to spend cryptocurrency while earning rewards at the same time. However, you have to embrace the fact that the risk is a part of the game. For those who are already familiar with cryptocurrencies, expanding to crypto credit cards is a good idea. But since crypto cards are low risk, they might be good for beginners. You must take factors like rewards rate, annual fees, benefits of the card and compare it with other credit cards available in the market. If you use traditional credit cards and like cashback and air miles, you’d be giving them up for cryptocurrencies. If you get crypto credit cards, make sure that you practice good credit habits, i.e., pay your full balances every month; otherwise, you would end up paying more interest than crypto rewards.
Several cryptocurrency platforms are partnering with payment merchants to help crypto enthusiasts improve their market experience. For example, Unbanked, which already offers various cryptocurrency-powered cards, partnered with Visa to introduce new crypto-friendly experiences. Unbanked equips customers with a more convenient, flexible way to buy, share and spend their cryptocurrency. Unbanked’s crypto debit card program also offers one of the highest reward rates in the industry, i.e., up to 6.38% back on user purchases. To know more about the crypto-related services Unbanked offers, visit our website today!
